Buried deep within the Scott Kilman’s Monday WSJ article on rising food imports is the following gem:
"Much of the Pepsi-Cola sold in the US is made from concentrate imported from places such as Ireland."
Kilman buried his lead.
And within the bowels of section C of the Journal, Agnes Crane of Dow Jones quotes Brian Edmonds, the head of US Treasury trading at Banc of America, to tell us foreign central banks are:
"a very large marginal buyer in our market [the market for longer-dated securities] right now"
The US economy in a nutshell. We import Pepsi, and the price of the long-bond is set by the Bank of Japan!
I exaggerate for effect, but I suspect there is a grain of truth here. I don’t know anything about the softdrink business, but my gut tells me some relative price somewhere is off if the US is importing Pepsi.
Update: I thought I was in dark mood last night, but then I read bond guru Bill Gross’ newsletter. "At some point we have to begin to give something back [to the rest of the world] besides Krispy Kremes, Starbucks franchises, and Treasury bonds. Unfortunately that will require some other kind of work than checking for messages on our BlackBerrys or managing investment portfolios for that matter. And it will require saving as opposed to consuming - something that several generations of Americans know nothing about."
Doing a country’s balance of payments is probably only slightly better than portfolio management ...